Witness Panel 1

• Ms. Kathleen Clarke

  Director

  Bureau of Land Management

  Read statement

  Witness Panel 1

  Ms. Kathleen Clarke

  Statement of Kathleen Clarke, Director,

  Bureau of Land Management

  and

  H. Dale Hall, Director,

  U.S. Fish and Wildlife Service

  U.S. Department of the Interior

  before the

  Senate Committee on Energy and Natural Resources

  Oversight Hearing on Pilot Project Implementation under

  Section 365 of the Energy Policy Act of 2005

   

  June 27, 2006

   

  Mr. Chairman and Members of the Committee, thank you for the opportunity to appear here today to discuss the Bureau of Land Management’s (BLM) and U.S. Fish and Wildlife Service’s (Service) efforts to improve oil and gas permitting pursuant to the Energy Policy Act of 2005 (EPAct).  Our testimony today will highlight our efforts and achievements to date implementing the Pilot Project to Improve Federal Permit Coordination under Section 365 of the EPAct.

   

  Bureau of Land Management

  At the BLM, we are dedicated to ensuring that the American people – regardless of where they live – benefit from the agency’s multiple-use mandate.  Recent natural disasters and the price of energy serve as reminders of the extent to which the availability of energy affects our quality of life.  Our agency plays an important role in providing an appropriate mix of both renewable and conventional energy supplies from the public lands and, in turn, contributes to a more secure and reliable energy future for our Country. 

   

  We can accomplish all that we do only by involving the public through partnerships and working with our cooperating agencies.  Our track record in developing and maintaining partnerships is second to none and in each community across the West you will find the men and women of the BLM hard at work to ensure that our decisions are based on the principles of multiple-use. 

   

  The BLM manages significant oil and gas resources on the public lands.  Over the next decade, demand for natural gas is anticipated to increase by more than 25 percent.  Public lands and the BLM play a key role here, as they currently provide 18 percent of the Nation’s natural gas production.  Our inventory of public lands in five key western basins identified nearly 140 trillion cubic feet (TCF) of natural gas, enough to heat more than 55 million homes for nearly 40 years.  In the Pinedale area of Wyoming, industry expects to produce 15 TCF of gas over the life of the field. This would supply nearly 10 million homes for 20 years.  Natural gas reserves of this magnitude are relatively rare.  For example, Alaska’s Prudhoe Bay field, the largest oil and gas field on the North American continent, contains 35 TCF of gas.  Although much of the Nation's domestic oil production takes place offshore, oil production from the onshore public lands is still significant, totaling more than five percent of all domestic production.

   

   

   

  U.S. Fish and Wildlife Service

  The Mission of the U.S. Fish & Wildlife Service is to work with others to conserve, protect, and enhance fish, wildlife, and plants and their habitats for the continuing benefit of the American people.  The agency’s role regarding energy development is multifaceted.  For example, the Service facilitates the environmentally sound exploration and production of privately held minerals on National Wildlife Refuge System lands in order to minimize impacts to those resources. We work in partnership with oil and gas operators to streamline this process so that the financial and operational needs of the operator are met, while fulfilling our role in protecting species and ecosystems for the enjoyment of the American public. We also work closely with other entities, such as the BLM, Environmental Protection Agency, and the Army Corp of Engineers, in the assessment of potential impacts to natural resources, when the requirements of the National Environmental Policy Act (NEPA) apply, and we consult with state and local agencies to ensure their regulatory requirements are met.  The Service participates in necessary clearances for protected resources, such as Endangered Species Act consultation for threatened and endangered species, monitoring and compliance activities, and establishing mitigation and reclamation standards for individual projects. The Service consults with the oil and gas operators on all phases of exploration.  This has helped in establishing effective relationships with the oil and gas community, and has effectively reduced delays and/or issues that may arise for either side.  The Service works with partners to streamline regulatory processes, while fully supporting the conservation, protection and enhancement of wildlife and wildlife habitat.

   

  Background

  The demand for onshore oil and gas is reflected in the dramatic increase in the number of applications for permit to drill (APDs) the BLM receives from one year to the next.  The number of APDs received by the BLM has increased every year since 2002, and we anticipate this trend to continue into 2007 and beyond.  A recitation of the numbers illustrates this dramatic trend.  The BLM received 4,585 APDs in 2002; 5,063 in 2003; 6,979 in 2004; and 8,351 in 2005.  Our current projection is that we will receive over 9,300 in 2006 and over 10,500 in 2007.  We are proud of the progress we have made in response to this increasing demand; in 2005, we processed 7,736 APDs, a record number.  However, despite this significant achievement, it is clear that more needs to be done to improve the APD process. 

   

  By signing the EPAct into law, and again more recently in the State of the Union Address, President Bush declared his continuing intention to secure America’s energy future, which includes promoting dependable, affordable, and environmentally-responsible domestic energy production while reducing U.S. dependence on foreign oil.  In passing the EPAct, Congress also signaled that it shares the President’s goal of providing access to reliable domestic energy supplies that are crucial to the economic health and security of every American household and business.  The EPAct creates an innovative way for Federal resource management agencies to cooperate in meeting this challenge through the Pilot Project.

   

  In order to address the increasing demand for drilling permits, Section 365 of the EPAct authorized the creation of the seven Pilot Project Offices, where interagency coordination improvements can be developed and tested, along with other methods to improve permit processing.  These Pilot Project Offices (Buffalo and Rawlins, Wyoming; Carlsbad and Farmington, New Mexico; Grand Junction/Glenwood Springs, Colorado;  Miles City, Montana; and Vernal, Utah) are existing BLM offices within the five key western basins that have processed about 70 percent of the APDs received by the BLM in the last three years.  Their workload and location makes them ideal for permit processing innovations. 

   

  In addition, Section 365 authorized an estimated $20 million in mandatory funding for these offices from the Federal share of rental receipts from onshore oil and gas leasing.  The Treasury Account for the Permit Processing Improvement Fund for the Pilot Project Offices was established on November 1, 2005, and the authorized receipts are now being placed in that account.    

   

  The track record of the BLM and the Service for cooperation will serve as a solid foundation for the efforts underway in the Pilot Project Offices.  We understand that your interests today are in the progress made by the BLM and the Service in implementing the Pilot Project for improved oil and gas permitting, pursuant to Section 365 of the EPAct.  We will now turn to discussion of the efforts underway to implement the Pilot Project.

   

  Implementing the Pilot Project

  Together, we recently toured the Pilot Project Offices.  Key leaders of many of our Federal and state partnership agencies joined us on these tours.  Based upon what we have seen we are pleased to report to you that the BLM and the Service are making considerable progress implementing the Pilot Project. 

   

  The Pilot Project provides a vehicle to bring more resources to accomplish permitting,  increased inspection and enforcement, foster innovation, test more efficient interagency processes, and try new and emerging technologies.  The Pilot Project Offices will be laboratories of efficiency and environmental protection, providing one-stop coordination for review of oil and gas development and for conducting inspection and enforcement activities.

   

  Interagency MOU

  An Interagency Memorandum of Understanding (MOU) to implement the oil and gas Pilot Project Offices was signed by the Administrator of the Environmental Protection Agency (EPA), the Secretary of Agriculture, the Assistant Secretary of the Army for Civil Works, and the Secretary of the Interior on October 24, 2005, ahead of the 90-day requirement in the Act.  The MOU establishes the roles, responsibilities, and delegations of authority among the Federal agencies.  In order to implement the terms of the MOU, BLM managers and their counterparts at partner agencies have been engaged in intensive planning and recruitment efforts to ensure that staff and support are in place in the Pilot Project Offices to meet the responsibilities outlined in the MOU and in the EPAct.

   

  Under the terms of the MOU, the BLM and the Forest Service will continue cooperating closely to administer oil and gas development on lands managed by the Forest Service.  Particular attention will be given to improving communication and information-sharing and to field reviews and inspection and enforcement activities.  Furthermore, the involvement of the Service will ensure increased cooperation concerning threatened and endangered species during project planning and implementation.  Staff from the Forest Service and the Service will be collocated in a number of the BLM Pilot Project Offices. 

  Together with BLM staff, they will complete environmental analysis required by NEPA; develop necessary clearances for threatened and endangered species and cultural resources; conduct monitoring and compliance activities; and establish mitigation and reclamation requirements for individual projects.

   

  The Service is working with the BLM at all levels to implement Section 365 of the EPAct.  A memorandum of understanding between the BLM and the Service identifies six specific responsibilities that, once fully implemented, will allow the Service to streamline its efforts under the permit review process.  The two agencies are customizing the duties of positions at collocated offices to improve permitting processes, while protecting of natural resources.  Adaptive, programmatic measures will reduce the Service’s permit review time while enhancing stewardship of endangered species and other Federal resources.  By integrating Service personnel with BLM staff early in the land use planning process, the Service anticipates greater regulatory flexibility, fewer delays, and an overall reduction in related negative environmental effects. 

   

  The Service has filled positions in five of the seven Pilot Offices and has assigned temporary staff to the remaining two offices that will remain in place until the Service can complete the hiring process for those positions.  These staffs are supported by three full-time existing Service employees who will oversee the initial stages of implementation of the pilot program.  Critical to the Service’s long-term success is the identification and application of new and improved procedures to address the high volume of APD workload anticipated by the BLM, and increasing staff in the pilot offices (and elsewhere) as workload increases and additional pilot program funding become available.

   

  The recent increase in approved APDs will lead to increases in the need for inspection and enforcement activities.  Accordingly, the BLM will work to focus appropriate resources on inspection and enforcement activities.

   

  State Coordination

  We are also working with state governments to bring state wildlife, environmental quality, oil and gas commission, and historic preservation staff into the Pilot Project.  This will further coordinate energy development activities and further ensure the protection of important species and cultural resources.  

   

  Staffing and Administrative Efforts

  One of the very important items for the BLM has been meeting staffing needs for the Pilot Project Offices.  To date, a total of 99 BLM Pilot Project Office positions (out of 105 identified) have been filled.  The agency has hired a total of 19 Petroleum Engineering Technicians and 21 Natural Resource Specialists for the Pilot Project Offices as well as other subject matter experts and the necessary support staff to meet the goals of the Pilot Project. 

   

  On February 23, 2006, the BLM transferred funds to the Forest Service for 6 Pilot Project Office positions, to the Fish and Wildlife Service for 10 Pilot Project Office positions, and to the Army Corps of Engineers for three and one-half Pilot Project Office positions.  We also have transferred funds to the Bureau of Indian Affairs to add one position in Farmington, New Mexico, and are working with the Bureau of Reclamation to add one position in Carlsbad, New Mexico.

   

  The BLM, through the Department of the Interior National Business Center, has hired a contractor to assist in the review and reporting of implementation and performance of the Pilot Project streamlining efforts over the next three-year period.  This independent review will assure an impartial analysis of our performance on the Pilot Project implementation.

   

  Additionally, the BLM has issued interim guidance for APD processing that incorporates the timeframes required by the EPAct.  These processing timeframes will also be incorporated into a reissuance of Oil and Gas Onshore Order No. 1, which will be published in the Federal Register.  The BLM has also issued interim guidance to implement the statutory categorical exclusions contained in the EPAct.

   

  Responsible Development

  As we implement Section 365, it is important to bear in mind that the EPAct does not change the requirements of the Endangered Species Act, the National Historic Preservation Act, the Clean Water Act, the Clean Air Act, the National Wildlife Refuge Improvement Act, or Federal Land Policy and Management Act.  The BLM looks forward to cooperating closely with its Pilot Project partners, such as the Service, in continuing to implement these important laws that protect our environment and cultural resources.

   

  One of the BLM’s responsibilities is managing wildlife resources, which is an important aspect of our multiple-use mandate.  Some have questioned BLM’s practice of using its wildlife biologists in the permitting process, but doing so specifically ensures that wildlife needs are considered in areas slated for energy development.

   

  BLM wildlife biologists are involved in the permitting process from an early stage in order to ensure the best protection for wildlife near proposed well drilling sites.  They work with companies to identify areas where there are wildlife concerns; attend onsite meetings with the operator at proposed drilling points; make recommendations regarding necessary Section 7 consultations for threatened or endangered species; and consult with state game and fish agencies concerning species of state interest.  They are also an important part of the interdisciplinary NEPA team responsible for the preparation of environmental analysis and development of appropriate mitigation and protective measures.  

   

  Through the EPAct, Congress directed the BLM to work on a number of important initiatives relating to energy development.  The BLM continually seeks new ways to minimize, mitigate, or compensate for any adverse impacts from development activities.

   

  Innovation of the type envisioned in the Pilot Project is already underway at the BLM. Some examples include a pilot block survey BLM initiated in the Carlsbad Pilot Office to identify cultural resource properties in the area, and the incorporation of advanced technologies and environmental Best Management Practices (BMPs), such as drilling multiple wells from a single location, centralizing production facilities or relocating them offsite, minimizing road construction, and performing interim mitigation.  In the Jonah Field, the BLM is evaluating an experimental drilling technique proposed by the operator using temporary wooden pallets for roads and well pads to determine if this technology reduces impacts to surface vegetation and soil.

   

  The BLM is also using performance-based standards to challenge industry to reduce emissions, minimize surface disturbance, and develop quick and effective reclamation techniques to improve restoration of disturbed areas.  If on-site mitigation measures do not achieve the desired conditions, companies have the option of undertaking off-site mitigation measures.  For example, in March of this year, we announced that EnCana is contributing up to $24.5 million over ten years toward an office dedicated to funding offsite mitigation and monitoring in the Jonah Field, Wyoming.  We expect that offsite mitigation will become an increasingly useful tool for improving habitats adjacent to natural gas development areas.

   

  In the Pinedale area of Wyoming, for example, concerns about impacts to wildlife have resulted in reduced surface disturbance compared to past development.  By implementing such measures as the consolidation of infrastructure, such as roads, pipelines, and production facilities, we have achieved an overall reduction in the footprint of development involved in winter drilling projects in the Pinedale Anticline.  

   

  Conclusion

   

  In conclusion, Mr. Chairman, energy is vital to expanding our economy and enhancing Americans’ quality of life.  The Administration is proud of the progress we have made in responding to the increased demand for access to the Federal onshore oil and gas resources we manage.  As noted at the beginning of our statement, over the next decade, demand for natural gas alone is anticipated to increase 25 percent.   The BLM and the Service plan to help meet this unprecedented demand by using tools provided under the EPAct, such as the Pilot Project, and developing and applying program innovations and process efficiencies that improve inter-agency coordination and effectiveness.

   

  The Pilot Project will further enhance our ability to respond to the demand for oil and natural gas, while meeting the other goals of our multiple-use mandate.  In the 10 months that have elapsed since the enactment of the EPAct, we have made substantial progress in our ongoing efforts to respond to this demand.   

   

  Thank you for the opportunity to testify today about the Pilot Project.  We would be happy to answer any questions you have. 

• Ms. Mary Flanderka

  State Planning Coordinator

  Office of the Governor - State of Wyoming

  Read statement

  Witness Panel 1

  Ms. Mary Flanderka

  TESTIMONY OF MARY FLANDERKA,

  STATE PLANNING COORDINATOR

  IN THE

  WYOMING OFFICE OF THE GOVERNOR,

  BEFORE THE

  SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES

  JUNE 26, 2006

   

  Good morning, Mr. Chairman and members of the Committee. I appreciate this opportunity to submit this statement as a part of today’s hearing related to the implementation of the Energy Policy Act provisions on enhancing oil and gas production on federal lands in the Rocky Mountain region.

   

  In their role as cooperating agencies, the Wyoming State Planning Office, along with various state agencies, have been involved in Bureau of Land Management (BLM) oil and gas development in Wyoming as well as participating in the implementation of many of the 2005 Energy Policy Act provisions.

   

  For successful energy development to occur, attention needs to be given to these three issues: flexibility in permitting based upon site-specific issues and appropriate available technology; speed in permit issuance; and accountability to ensure that the right practices are implemented in the right way and at the right time.  The early implementation of the Energy Policy Act has focused on permit issuance.

   

  My remarks this morning will focus on the impact of the legislation on energy development in Wyoming regarding permitting, planning, monitoring/inspection and reclamation activities.

   

  The opportunity exists for the BLM, with appropriate funding, to maximize the positive impacts and minimize the negative impacts associated with energy development in Wyoming.

   

  There is no question of the need to develop Wyoming’s energy resources. As a result of that development, the state of Wyoming receives significant revenue from royalties generated by mineral production. However, concurrently, Wyoming feels the impact of accelerated development through social and economic changes in local communities as well as impacts to wildlife, recreation and air and water resources.

   

  There is support for permit-streamlining efforts that will increase energy production; however, there is equal support for strengthening other aspects of regulating energy development. This includes effective and efficient planning and inspection/monitoring activities. Planning and monitoring require a partnership between the state of Wyoming, the BLM and others. Without improving planning and inspection/monitoring activities, permitting times could continue to languish due to social or even legal constraints related to impacts on other resources.

   

  Bottom line, an increase in permits is not the only element that will increase and maintain energy production. The entire development stream (planning, permitting, monitoring and reclamation) must be fully attended to if energy development is to occur efficiently and effectively.

   

  Project environmental impact statements (EIS) and resource management plans (RMPs) are overdue.  These documents are imperative to successful energy development.

   

  Three of the four BLM time-sensitive projects identified in a June 2004 priority list of Wyoming BLM land-use planning projects are yet to be finalized – two years after their initial deadlines. The staff at the state and local field offices find themselves multi-tasking to a remarkable degree and being torn between planning and permitting. Additional resources are needed to allow a planning team to focus on completing RMPs, and project EISs are needed to ensure that there is always a next generation of applications waiting to be processed.

   

  The completion of RMPs is important for reasons other than just permitting; there is a need to address thresholds of protection for other important resources. The current RMPs are outdated. At the time of printing the current RMPs, the current level of development had never been anticipated and new technology and science have since created additional opportunities for development. The RMP revisions need to identify those areas whose leasing should be deferred for the protection of other resources, while energy-rich areas are fully developed. As an example, the Pinedale Field Office had 92% of its area leased, with a high likelihood of full development. The 8% of remaining land does not seem able to protect other resource values such as sage grouse, mule deer, antelope or recreation opportunities.

   

  Even with additional personnel in the pilot offices, the permitting increase is occurring. The state and local BLM offices are still struggling under increasing workload and high turnover.  This will change with training and experience.

   

  I would like to take just a few minutes, though, to give credit to the state BLM office and Wyoming’s field offices. The state agencies, local counties and BLM offices have been working on many issues, either as partners or via cooperating agency status. Although the process is always not smooth, there is a commitment by all to continue to make the relationships more effective and efficient. Wyoming BLM Director Bennett has been a leader in making sure communication continues regardless of impediments.

   

  Permitting is ramping up in Wyoming.  The Wyoming BLM has processed 2900 Applications for Permit to Drill (APD) in 2005 and is anticipating processing 4500-5000 APDs in 2006.

   

  Wyoming BLM, from the state’s perspective, has faced serious pressure to lease and permit – both of which are necessary for development. The Buffalo and Rawlins field offices have received almost all personnel to fulfill permitting goals. But throwing money and personnel at a problem does not necessarily make permitting go faster. Experience and coordination are necessary if efficient permitting is to happen. It is ludicrous to expect field offices with up to 20% annual turnover rates to be operating at full speed.

   

  There are currently no state agency employees actively involved in the permitting emphasis in the pilot projects. The state departments of Environmental Quality and Game and Fish see their roles evolving with planning or monitoring/inspection activities. And, again, both areas are suffering.  Dialogue is occurring regarding the placement of state employees in these two offices.

   

  Monitoring is vital to validating whether or not development is proceeding properly.

   

  Although the Energy Policy Act refers to the development of best management practices and the need for enforcement, very little attention was directed to those areas during the act’s development. Moving ahead quickly on any project is dangerous if there is no monitoring to make sure that the project is being done correctly. BLM energy development in Wyoming is headed in exactly this direction due to a focus on permits above all else and a lack of funding. Without the assurance that development is proceeding appropriately, additional permits could be processed with faulty information, leading to serious environmental problems – which could in turn lead to court injunctions.

   

  BLM monitoring funds have seen limited increases from the national monitoring funding, but that funding is spread continually thinner as more wells are completed. A smaller overall percentage of wells is actually inspected annually. Frankly, the words in the lease become meaningless if there is no accountability, assurance or inspection that the work is getting done. Numbers already indicate that field offices in Wyoming are having a difficult time meeting the existing inspection requirements. Wyoming BLM field offices in 2001 were able to complete 93% of 1750 required environmental inspections, for a total of 15,000 federal permitted wells. In 2005, the BLM completed only 66% of its required 2100 environmental well inspections of a total of 20,000 federal permitted wells; this year, the state office anticipates that it will be able to conduct 66% of required well inspections. The data clearly indicates that an expedited well permitting process coupled with increased drilling applications requires that federal agencies be provided additional adequate resources to fulfill inspection and enforcement guidelines. Some may argue that there is no need, but there was an inspection incident in and adjacent to the Pinedale Field Office  Jonah field in 2005, where a reporter uncovered many significant environmental violations. Inspection is far less expensive to industry, the BLM and the state than an injunction stopping additional development.  The pilot office initiative has addressed inspection and enforcement capability to the Rawlins and Buffalo Field Offices but is only in the early stages of implementation.  Similar assistance needs to be added to other BLM field offices.

   

  A Government Accounting Office (GAO) Oil and Gas Report June 2005 identified the concern that increased permitting activity by the BLM has lessened the agency’s ability to meet its environmental protection and liability responsibilities. The report indicates that field managers under pressure to complete permitting processes often shift workloads from inspection and enforcement to application processing. Examples from the report describe how the Buffalo, Wyoming and Vernal, Utah field offices, the two field offices with the largest amount of permitting activity, were only able to each meet their annual inspection goals once in the past six years. Additionally, the report highlights that the Buffalo Field Office was only able to achieve 27 percent of its required environmental inspection goals during the 2004 fiscal year. Clearly it is in the interest of the public, state agencies, the BLM and industry to ensure that the guidelines of leases and permits are being followed. The GAO recommends acquiring staff who would be dedicated to performing inspection and monitoring activities.  Again, Wyoming concurs with this recommendation.

   

  Federal energy development in Wyoming can be accomplished in such a way that meets the nation’s energy needs while still protecting the state’s social, economic and natural resources. In order to do that, the entire development process from cradle to grave needs attention from planners, decision makers, permitters and inspectors.

   

  Suggestions for improvement:

   

  In an effort to improve the effectiveness and efficiency of oil and gas development the following suggestions are offered:

   

  • Complete RMPs and project EISs.
  • Provide performance-based objectives, rather than prescriptive limitations within project and RMP final decisions.
  • Continue to obtain and develop the necessary staff in both numbers and expertise to continue to permit.
  • Continue to coordinate formally (via cooperating agency status) or informally with local and state governments to address site-specific social, economic and resource concerns in an appropriate manner.
  • Stabilize and/or increase the U.S. Environmental Protection Agency’s (EPA) funding to states so that existing state staffs can provide equal attention to their portion of the permitting process.
  • Increase the funding for EPA’s Underground Injection Control program to the Wyoming Oil and Gas Conservation Commission.  
  • Maintain or increase the National Park Service funding for the Historic Preservation Grant. Wyoming is the busiest state in the nation for Section 106 reviews with over 400 requests for comment from the BLM, but ranks 44^th in funding.
  • Commit funding to coordinating and procuring the most up-to-date resource data.
  • Consider the creation of NEPA teams led by individuals with project management experience to complete RMPs and project EISs.
  • Make the Pinedale field office a pilot office.

   

  Finally, there was much controversy in 2005 about whether winter stipulations on BLM land were a hindrance to energy development. I would encourage you to avoid any hasty action that would remove these stipulations. Generally, these stipulations provide crucial protection to wildlife. Our preference is to have BLM outline in advance opportunities to work through stipulations. With proper planning and good communication, more times than not, issues can be worked out appropriately.

   

  Again, thank you for this opportunity to submit my written comments to the record.

   

  Respectfully submitted,

   

  Mary Flanderka

  Wyoming State Planning Coordinator

• Mr. Duane Zavadil

  Vice President of Government and Regulatory Affairs

  Bill Barrett Corporation - Testifying on behalf of the Independent Petroleum Association of Mountain States

  Read statement

  Witness Panel 1

  Mr. Duane Zavadil

  Testimony of
  Duane Zavadil
  On behalf of
  The Independent Petroleum Association of Mountain States,
  Before the
  Senate Committee
  on
  Energy and Natural Resources
  June 27, 2006
  Mr. Chairman and members of the Committee, my name is Duane Zavadil and I am
  Vice President of the Independent Petroleum Association of Mountain States. I want to
  thank this Committee for holding a hearing about the benefits to the public of the Energy
  Policy Act of 2005. First, I’d like to thank all members of this Committee for their
  dedication and hard work in passing the Energy Policy Act of 2005. Second, I want to tell
  you the good news, that this Committee’s hard work from last summer, is making a
  difference in public land development to help increase supplies of natural gas headed to
  consumers. The final point I would like to make is that close oversight of the Act’s
  implementation will be necessary to see continued increases of energy production on
  federal lands in the Intermountain West.
  Public Land Energy and the Energy Policy Act
  Public lands owned and managed by the federal government hold resources that benefit
  the nation in multiple ways: food, recreation, habitat for wildlife, and last but not least, energy.
  As the nation’s appetite for energy continues to grow and production from traditional sources
  decline, public lands in the Rockies must play a significant role in the nation’s energy security.
  The federal government is the largest owner of natural gas reserves in the nation by way
  of its surface and subsurface management of public lands. The Bureau of Land Management
  (BLM) and the Forest Service manage 261 million and 193 million acres of surface lands
  respectively. These lands are located overwhelmingly in the Western states. The federal mineral
  estate underneath BLM, Forest Service, other agencies and even some private lands,
  encompasses 699 million acres.
  The federal government will play a significant role in the future development of natural
  gas because demand for natural gas is not expected to decline significantly in the next two
  decades and likely beyond. According to the Energy Information Administration (EIA), by 2030
  U.S. consumption of natural gas will be 27 trillion cubic feet, up from 21.9 Tcf today. It is
  estimated that federal lands contain nearly 200 trillion cubic feet of technically recoverable
  natural gas. Public lands contain the largest onshore reserves of natural gas in the nation and
  currently supply 11 percent of the nation’s natural gas. The EIA estimates that Intermountain
  West natural gas production will double over the next two decades surpassing the Gulf of
  Mexico. Today, more than half of the natural gas from this region is produced from public lands.
  The current bureaucratic process for developing these lands, however, moves slowly and
  in recent years has not kept pace with the nation’s energy demands. Last year, hurricanes
  Katrina and Rita underscored the lack of secure, excess natural gas. The agency currently
  responsible for administering energy production on public lands, the Bureau of Land
  Management faces a multitude of issues. Preparing critical land use plans has slowed to a crawl.
  Leasing has become divisive, spurring extended administrative processes through protests and
  appeals of federal agency decisions. NEPA remains a source of delay and uncertainty. Demand
  for drilling permits has outpaced the agency’s ability to process them. BLM’s management of
  this dynamic combination of factors has a real effect on the market price for natural gas.
  Notwithstanding these problems, the Energy Policy Act of 2005 is providing, and will continue
  to provide relief to the 62 million households that consume natural gas.
  The Act contains provisions to improve the federal government’s ability to develop its
  onshore energy resources in the public interest. Both leasing and permitting on federal lands
  were addressed in the landmark legislation. For some provisions, it is too early to determine
  whether the implementation of this legislation will yield substantive changes in public land
  energy development. However, we are seeing tangible benefits of this legislation in the form of
  increased production that could reduce the impact of another serious supply disruption.
  Leasing, Planning and Permitting
  Planning
  The land use planning process is critical to oil and gas development on public land. Both
  the BLM and Forest Service are required to prepare planning documents pursuant to federal law.
  These plans guide multiple-use activities in the areas covered by the plans. The importance of
  these plans cannot be understated. If land-use plans are not updated with sufficient consideration
  of the need for expanded energy production, the nation’s ability to provide affordable domestic
  energy is severely limited.
  Many of the current plans are outdated and do not reflect the importance of public lands
  in meeting energy demands. Recognizing this, in 2001BLM initiated an overhaul of its entire
  planning base with the goal of updating all 160 RMPs within ten years. Twenty-one “Time
  Sensitive Plans” (TSP) were identified as high priority because they address energy resource
  development, respond to nationally significant lawsuits, or have legislatively mandated time
  frames. With 2006 upon us, six TSPs critical to oil and gas development are not yet final (Table
  2) limiting BLM’s ability to effectively manage the public’s energy resources. Furthermore,
  some of the plans, in their draft form, contain prescriptions that further limit, rather than expand,
  the potential for energy production. Simply put, many of these draft plans are inconsiderate of
  the effect that the government has on natural gas prices and consumers. If these plans are
  appropriately updated, BLM managers will be able to more effectively carry out many elements
  of energy program administration, elements such as leasing and permitting that were addressed
  Table 1: 2005 Lease Protests
  State Parcels
  Offered
  Parcels
  Protested
  Percent
  CO 292 234 80%
  MT 442 48 11%
  NM 314 197 63%
  UT 329 264 80%
  WY 968 542 56%
  by the Act. These plans need to be reviewed for their impact on consumers and completed as
  soon as possible.
  Leasing
  Media accounts of oil and natural gas leasing lead one to believe that leasing is galloping
  along at a break neck pace. In reality, leasing has continued at an even pace through both the
  Clinton and Bush Administrations. For the last several years, with rising natural gas prices and
  improved technology, there has been significant interest in areas that were not feasible to
  develop in the past. As these areas have been nominated for oil and gas leasing by companies,
  conflicts arise with organizations who want to block all development. As a result, administrative
  challenges, called “protests,” of leases in the Intermountain West have been on the rise over the
  past few years.
  BLM lease sale protests have increased
  significantly over the past few years. Between 2001 and
  2005, 42% of all lease parcels offered in the
  Intermountain West have been protested. In 2005, 55%
  of the lease parcels offered were protested (Table 1).
  Isolating Colorado and Utah, 80% of all offered lease
  parcels were protested. Protests divert BLM personnel
  and funding from effectively managing the multiple uses of the land to fighting litigation and
  administrative processes. Protests further tie up a company’s capital that could be used to
  produce energy.1 (See Attachments for more information about Leasing Public Lands).
  1 Companies that successfully bid on a lease are required to pay the entire bonus bid (sometimes upwards of $2,000
  per acre in recent sales) and first year’s rent within 10 days of the lease sale.
  Table 2: Applications for Permits to Drill (APD)
  Q1-Q3
  2004
  Q1-Q3
  2005
  Q1-Q3
  2006
  Average
  Change
  APDs
  Received
  4470 5769 7272 27%
  APDs
  Approved
  3363 4296 4874 20%
  The Energy Policy Act of 2005 has the potential to improve the leasing process for public
  lands. The Act requires agencies to examine their leasing processes to determine where
  improvements can be made. The Act requires further coordination between agencies where there
  is overlapping jurisdictions (wildlife, air quality, etc.). Pilot project offices should have
  expanded capacity to review nominations and offer parcels for leasing. These measures provide
  the basis for BLM to eliminate many of the delays associated with nominating and issuing leases
  for public land energy production.
  Permitting
  Permitting remains the most immediate and perhaps manageable element controlling the
  amount of natural gas to reach consumers. Commodity prices tells us that more wells need to be
  drilled. Both industry and BLM have responded and drilling is up. The backlog of permits in
  BLM field offices, however, continues to grow. As Table 2 shows, the number of permits
  approved by BLM has increased 20%
  over the last three years. At the same
  time, the number of permits received by
  BLM has increased by 27%. Field
  offices have fallen further behind. For
  companies juggling tight drill rig
  availability with seasonal stipulations that allow drilling only during a narrow time frame,
  permitting delays are very problematic. Approval times are unpredictable and often reaching six
  months or more. An unpredictable permitting process leaves drilling contractors unable to
  sufficiently respond to market conditions by moving more rigs into the region, and producers are
  threatened with increased costs by losing drilling rigs or paying for drill rigs that they cannot
  keep busy. Multiply these pressures by the number of rigs that are working and the need to have
  multiple permits available to execute a coordinated, flexible drilling program and the need for a
  more timely permitting process becomes painfully apparent. (See Attachments for more
  information about Drilling Rigs in the Rockies).
  The Energy Policy Act of 2005 created the Pilot Program to Improve Federal Permit
  Coordination in the busiest BLM field offices throughout the Intermountain West. The provision
  creating the pilot program also included a funding mechanism that uses one-half of the revenues
  received from lease rental payments. BLM has diligently implemented this section by hiring and
  training new personnel in the pilot offices. Although the program is just getting off the ground,
  IPAMS has great expectations that new personnel will quickly learn their responsibilities to
  minimize the apparent losses in efficiency that are inherent in any new program.
  In addition to improving coordination among the federal agencies, IPAMS is very
  pleased that the pilot program will examine the permitting process to see where efficiency gains
  are possible. IPAMS believes this may be the most important step toward improving the
  permitting process on federal land. A comprehensive look at the current process to identify
  where the bottlenecks occur will help this Committee determine potential legislative action and
  oversight opportunities. Without examining the permitting process and making changes to
  improve its efficiency, BLM will likely continue to fall behind in permit approvals even as the
  agency’s role will grow more important in meeting the nation’s energy needs.
  One tangible improvement on the permitting front is the use of Section 390 of the Energy
  Policy Act of 2005 which categorically excludes certain oil and gas operations from redundant
  analysis under the National Environmental Policy Act. Recently, IPAMS conducted an informal
  survey of our members regarding their experience with Section 390 of the Energy Policy Act.
  Nearly one-third of the respondents had suggested the use of the categorical exclusions to the
  BLM and 28% were accepted. Another interesting result from IPAMS’ survey was that Section
  390 categorical exclusions took just as long to complete as the normal process for approving
  permits. This finding may indicate the need for closer oversight by this Committee to ensure the
  agency is carrying out the Congressional intent of Section 390.
  Conclusion
  Public land natural gas development is vitally important to the nation. The government’s
  role in the natural gas markets today should be apparent and will increase in over time. While
  paradigm changes in the administration of the federal minerals program are necessary to avoid
  increasing dependency on foreign natural gas, the Energy Policy Act of 2005 is helping to
  address some of the immediate barriers to meeting natural gas demand. IPAMS hopes that
  federal agencies, at all levels, will continue to work with industry to ensure that the opportunities
  created by the Energy Policy Act of 2005 continue to increase energy production on federal
  lands.
  Thank you for the opportunity to testify before you today, I am happy to answer any
  questions you may have.

• Mr. Tom Reed

  Wyoming Field Organizer

  Trout Unlimited

  Read statement

  Witness Panel 1

  Mr. Tom Reed

  Statement of Tom Reed

  Trout Unlimited

  Before the Senate Energy and Natural Resources Committee

  June 2006

   

  Chairman Domenici, Senator Bingaman, and Members of the Committee, thank you for giving me the opportunity to speak to you today about oil and gas production on Federal lands in the Rocky Mountain Region.

   

  My name is Tom Reed.  I grew up in Colorado and graduated from Arizona State University.  I spent several years working as an instructor in Wyoming teaching, among other things, fly fishing and horse-packing.  I also worked for the Wyoming Game and Fish Department. I currently serve as the Wyoming Field Coordinator for Trout Unlimited’s Public Lands Initiative, the purpose of which is to develop sound scientific and technical information demonstrating the importance of public lands to coldwater fisheries, wildlife, and hunting and fishing opportunities as well as sharing this information with sportsmen across the West.     

   

  Our public lands sustain some of the cleanest water, healthiest habitats, and finest fishing and hunting in North America.  More than 50 million Americans hunt and fish, however, too often their voices are lost in the din of controversy that has come to define public land management.  A significant and growing concern among sportsmen is the impact of energy development on fish and wildlife habitat on our public lands.

   

  Wyoming is at the forefront of these energy and public land issues and is more than carrying its weight for the energy needs of this country. Oil and gas exploration and development is taking place at an unprecedented rate. It is estimated that 25 percent of the state will be impacted by oil and gas development to help meet our nation’s demands. That’s a land area the equivalent of 360 Washington DCs.

   

  In the Rocky Mountain West, energy development is proceeding at an ever increasing rate.  More than 26 million acres of public land managed by the Bureau of Land Management (BLM) in Wyoming, New Mexico, Utah, Colorado, and Montana are open for leasing.  In a year’s time, BLM approved 5,700 new drilling permits in those states – a 62% increase over the previous year.  BLM has a total of nine fisheries biologists in those five states.  That’s about 3 million acres of leased land per fisheries biologist.  Most people agree that is an impossible responsibility to place on nine people.

   

  At Trout Unlimited, we feel that oil and gas development is appropriate in some places and inappropriate in others. But even where it is appropriate, sound science needs to be utilized to protect our fisheries and wildlife, and as an extension, our fishing and hunting opportunities.  We are not side-line critics.  We believe in rolling up our sleeves and working with industry to minimize the effects of development on fish, game, and water resources.  For example, we are working in Wyoming with Dudley and Associates on the Seminoe Road coalbed methane project to try and develop operational protocols for development that minimize effects on ground and surface water and fisheries.  Questar has similarly demonstrated a willingness to work with us.  We believe it is important to work with companies to ensure that development is done right. 

   

  In our view, however, doing development right includes acknowledging when it’s being done wrong, and where it shouldn’t be done at all. Wyoming truly is blessed with natural resources, both below and above the ground. The state’s scenic beauty, wildlife and fisheries are unparalleled.  This state is known for its long vistas, sagebrush deserts, high mountains, deep forests and crashing rivers. To the hunter and angler, Wyoming offers some of the finest outdoor opportunities in the world. From its abundant pronghorn antelope and mule deer to its elk to its four subspecies of native cutthroat trout, this state sustains a wide variety of game and fish and enough wild country to absorb a lifetime of exploring. I personally have hunted Wyoming’s deep spruce forests for elk, fished the high mountain lakes for native trout, and crawled through the sagebrush in an attempt to take a nice pronghorn buck. I’ve ridden my horse in the high country, and floated down wild rivers in the lower deserts. There are a lot of people in Wyoming just like me: they live there for the great outdoors and for the opportunity to hunt and fish with their families.

   

  But these can be troubling times for people like me who love the great outdoors. At the current rate of oil and gas exploration, scientists, particularly with the Wyoming Game and Fish Department, are having a difficult time keeping up with the pace of development.

   

  It is important for Congress to recognize that intensive impacts are occurring and will continue to occur as this region is changed from wild, undeveloped country into industrial zones. Funding for land management agencies such as the Bureau of Land Management needs to be secured specifically for scientists who deal with impacts on wildlife and fisheries. State wildlife agencies like the Wyoming Game and Fish Department also need national funding so that biologists can be hired to deal solely with oil and gas issues.

   

  These biologists should collect data, monitor impacts and design and implement mitigation, working closely with industry and land management agencies. There is a willingness among many in the industry to move in this direction, but Congress also needs to step up with money for these agencies so that our wildlife and fisheries resources are taken care of.  We believe that the scale and pace of development on oil and gas fields far outstrips the organizational capacities of both state and federal agencies responsible for managing fish and wildlife and the habitats they depend on. 

   

  How this development is going to impact our wildlife and fisheries heritage is largely unknown because much of the development has taken place only in the last few years. To keep abreast of this, we need more science and we need more scientists.  We also need to slow down and not allow energy production to outstrip the land’s productive capacity.   

   

  To clarify how overworked and understaffed our biologists are, consider: there are only three people in the Game and Fish Department’s Cheyenne office that deal with oil and gas issues. When one realizes that just one corner of Wyoming—the Powder River Basin—faces an estimated 60,000 wells, it is clear that is too much, too fast.

   

  The Department estimates that it needs staff biologists that deal with nothing but oil and gas development to study, understand and try to mitigate impacts to crucial big game, sage grouse, sensitive species and fisheries habitats.  That tally is as much as $2 million per year.  Similar expenditures will be needed in other states and for federal agencies.

   

  The purpose of this hearing is to determine the effects of the Energy Policy Act’s provisions.  The fact is that after 11 months it is difficult to determine the effects on fish, wildlife, and water resources from the acceleration of development.  As a life-long hunter and angler, I can say with certainty, it isn’t looking good for game and fish.  A biologist within the Wyoming Game and Fish Department told me that wildlife and fisheries are going to lose, and the best we can hope for is to minimize the loss.

   

  Along these lines, one aspect of the Energy Policy Act that I would urge the Committee to look into is implementation of Section 1811 of the Act.  That section authorized the National Academy of Sciences (NAS) to prepare a report on the impact of coalbed methane development on water.  Unfortunately, because NAS is depending on funding from BLM to get this report together, and the BLM has not provided any money to them to do it, the study has not been initiated.  

   

  Given the concern of sportsmen and communities in the West over the impact of rapidly expanding coal bed methane development on both water supplies and water quality, an NAS evaluation of the issue would be very helpful to states, local communities, and individual citizens in determining what sort of regulatory regime is appropriate for addressing the impacts on water quality and quantity.  We urge the Committee to let the BLM know that it expects the agency to provide the funding necessary to the NAS to get on with this important study.

   

  I mentioned earlier that there are also places where oil and gas development is inappropriate and I’d like to specifically thank our Senator Craig Thomas for his landmark stance against oil and gas drilling on our national forests. We, too, believe that our national forests should be off-limits to oil and gas drilling. These are our headwaters and our hunting grounds. They are places where Wyomingites go to recreate and relax, to spend time with family and friends. These are heirloom places that should be passed down to our children and to their children.

   

  The Wyoming Range in the Bridger-Teton National Forest harbors some of finest mule deer, moose and elk hunting in the state. It also is home to three important subspecies of native trout: the Colorado River, Bonneville and Snake River cutthroat.  People from all over the country come to this region to fish, hunt and relax.  Today, we are heavily developing country east of the range for oil and gas.  Places like the Pinedale Anticline and the Jonah gas field are helping to fuel this nation, but they are also places that have been historically used as winter range for our big game herds.

   

  We are very concerned about the amount of development that is taking place on these winter ranges. It is a virtual certainty that our big game resource, and as an extension, the quality of big game hunting in this region is going to decline. If we develop not only winter ranges, but migration routes and summer ranges as well, we believe it will spell the end of quality hunting in western Wyoming. We’d like to see some very special places such as the Wyoming Range set aside for recreation and relaxation.

   

  An example of why some places should be off-limits to energy development is the La Barge Creek drainage in the Wyoming Range. This stream is the site of a large restoration project being undertaken by the Wyoming Game and Fish Department to bring back a native trout, the Colorado River cutthroat. At a cost of an estimated $2 million, some 58 miles of stream are being reclaimed and revitalized for this native, pure fish that has swum these waters for thousands of years. Yet even while fisheries biologists are hard at work with the restoration process, there are daily flights of helicopters doing seismic testing in the backcountry headwaters of La Barge Creek for potential gas field development.

   

  Oil and gas development in the headwaters would mean roads and roads heavily impact fish by flushing sediment into drainages and blocking the passage of spawning fish. These two things: native pure fish swimming in clear, clean water on our national forests and industrial development cannot make for a happy marriage.

   

  Our public lands sustain the last-best fish and wildlife habitat and hunting and fishing opportunities in the West. We only have one chance to develop our lands for gas and oil responsibly and all indications show that expedited leasing, rushed approvals for application to drill, and a lack of resources for meaningful studies, monitoring, and enforcement are spoiling that chance.  Trout Unlimited commissioned a literature review of information describing the effects of energy development on coldwater fisheries.  The lack of data is daunting.  I would like to submit this report for the record. 

   

  I want to share with you a few more examples from the field that help to explain why state fish and game departments, federal fish and wildlife biologists, and hunters and sportsmen across the Rocky Mountain West are so concerned about energy development. 

   

  • In the past two years on the Uinta National Forest in Utah, the leasing of National Forest Lands was approved and carried out, and did not take into account the important fisheries restoration work that has occurred or the 2000 Range-wide Conservation Agreement and Strategy for Bonneville Cutthroat Trout. In at least one instance, neither the forest’s fisheries biologist nor District Ranger was aware that the resources they are charged with managing would be facing new threats and challenges resulting from leasing that occurred in the Diamond Fork, a watershed that sustains a Conservation Population of native Bonneville Cutthroat Trout and also in the Strawberry Valley, where Utah’s most popular trout fishery, Strawberry Reservoir, is located.

   

  • In April, 2006 the Forest Service leased areas of the Wyoming Range.  Many of these leases are part of watersheds that sustain core-conservation populations of Colorado River cutthroat trout, a species that is currently regarded as “sensitive” by both State and Federal agencies. However, the Bridger-Teton National Forest is lacking baseline data and inventory information.  In addition to other concerns such as air quality, Canada Lynx habitat damage, and cumulative impacts, we don’t think it’s prudent to lease and develop areas in the absence of baseline data. 

   

  • Preliminary results of an ongoing study on mule deer impacts in the Upper Green River Basin of Wyoming by Western EcoSystems Technology, Inc. (WEST), BLM, the energy industry and Wyoming Fish and Game show:

   

  • Mule deer abundance on the Mesa has declined. The Mesa’s overall mule deer population is down 46 percent since 2002.
  • Over-winter fawn survival rates have been slightly lower on the Mesa compared to the control region for four of the five years;
  • Mule deer are moving from previously “high use” winter habitat areas into areas that previously had been of “low use” suggesting that drilling and development has displaced mule deer to less suitable habitats;
  • Sublette County’s mule deer are among the most migratory in the West, traveling between 60 to 100 miles between summer and winter ranges. Documented migration routes, such as Trapper’s Point Bottleneck, remain important pathways between winter range in the Upper Green and summer range in the surrounding mountains.

   

  A complete and sound understanding through research and continued monitoring of the impacts to our fish, wildlife, lands, waters and air is only prudent before jumping head-first into lease obligations and expedited development. 

   

  Thank you again for the opportunity to testify today.  I will be happy to answer any questions you may have.